Gold Slides to 4-Week Low, Existing Home Sales Disappoint

Gold has posted considerable losses on Wednesday, as the metal trades at $1325.45 in the North American session. On the release front, US Existing Home Sales dropped sharply, posting a reading of 5.39 million. On Thursday, the US releases two key events – Core Durable Goods report and Unemployment Claims. As well, the much-anticipated Jackson Hole meeting begins on Thursday.

US housing numbers have painted a mixed picture this week. Existing Home Sales in July disappointed with a weak reading of 5.39 million, down 3.2% from a month earlier. This was much lower than the estimate of 5.52 million and marked a 4-month low. Year-over-year, the indicator decreased for the first time since November 2015. It was a completely different story on Tuesday, as New Home Sales jumped to 654 thousand, marking a 12.4 percent increase. This was the highest number of new home sales since 2008.

The Jackson Hole economic conference, which begins on Thursday, will bring together the heads of central banks and other senior financial officials. Investors are sticking to the safety of the sidelines, unwilling to make any major moves. The markets will be looking for hints from Federal Reserve chair Janet Yellen regarding the Fed’s monetary plans, particularly the timing of a rate hike. FOMC members are expected to express their views in the days leading to the crucial meeting. Fed Vice Chairman Stanley Fischer took the opportunity and sounded upbeat about the US economy, saying that the Fed was close to its aims of a full labor market and the inflation target of 2 percent. The latter claim sounds a bit optimistic, as US inflation levels have consistently been closer to zero than the 2 percent level. Janet Yellen will likely address the inflation issue at Jackson Hole, as inflation levels will be a crucial factor in whether the Fed pulls the rate trigger before 2017. The odds of a September hike are only about 12%, while the likelihood of a December move is around 40%.

XAU/USD Fundamentals

Wednesday (August 24)

  • 9:00 US HPI. Estimate 0.3%. Actual 0.2%
  • 10:00 US Existing Home Sales. Estimate 5.52M. Actual 5.39M
  • 10:30 US Crude Oil Inventories. Estimate -0.5M. 

Thursday (August 25)

  • 8:30 US Unemployment Claims. Estimate 265K
  • 8:30 US Core Durable Goods Orders. Estimate 0.4%
  • All Day – Jackson Hole Symposium

*Key releases are highlighted in bold

*All release times are EDT

XAU/USD for Wednesday, August 24, 2016

XAU/USD August 24 at 10:15 EDT

Open: 1337.94 High: 1340.15 Low: 1326.65 Close: 1325.45

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1245 1279 1307 1331 1361 1388
  • XAU/USD was flat in the Asian and European sessions. The pair has posted considerable losses in North American trade
  • There is weak resistance at 1331
  • 1307 is providing support
  • Current range: 1307 to 1331

Further levels in both directions:

  • Below: 1307, 1279 and 1245
  • Above: 1331, 1361, 1388 and 1416

OANDA’s Open Positions Ratio

XAU/USD ratio is showing slight gains by short positions. Currently, long positions have a strong majority (62%), indicative of trader bias towards XAU/USD reversing directions and moving upwards. 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.